Since the bear market of 08/09, I've been extremely cautious and kept most of our investment funds in cash or cash equivalents. During that time, I've been expecting a significant correction of more than 20%. Unequivocally, I've been wrong. With the exception of an almost 20% drop in the summer of 2011, the stock market hasn't been close to another bear market since 08/09, despite many experts forecasting near term market collapses.
Going forward, I continue to be cautious. I still think that bear market is coming soon. However, for now, it seems the market trend is up. In hindsight, my biggest investing mistake was to take profits too early for the stocks I did buy. So, I will start keeping my winning stock picks longer, instead of taking only 20, 30 or 50% profits. My second biggest mistake was not selling losing stocks soon enough. I need to start cutting losses sooner for my poor stock picks, before the price drops over 20%.
Finally, I'm preparing myself to make some selective purchases, when the next bear market does occur.
For more Reflections and Musings, check on Saturdays for a new segment.
This is not financial advice. Please consult a professional advisor.
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